Strategic Alliances – Essay – YWYee
Search
Essays
Sign up
Sign in
Contact us
Tweet
Index
/Business
Strategic Alliances
Strategic Alliances
Strategic alliances are partnerships between two or more firms that decide they can better pursue their mutual goals by combining their resources such as financial, managerial and technological. Strategic alliance caused by the need for organizations to respond to the globalization of markets. There are some motivation, possible risks and reasons for failure of the strategic alliance will be discussed at below.
First of all, the motivation for companies to form strategic alliance will be discussed. Firstly, by using strategic alliance, it enables the firm can easily enter into a foreign market. By having partnership with local firm, local firm can provide knowledge of markets, customer preferences, distribution networks and suppliers about their country. Sometimes, the foreign firms are not allow to enter into certain market alone due to some restriction by the local market. Thus, strategic alliance is required. It may help the firm enters into that market easily as the local firm know the needs, wants and demand of the market well. For example, a strategic alliance between British Airways and American Airlines was created in 1993 that designed to give the two airlines increased access to North American and European markets, respectively.
Secondly, strategic alliance enables the companies involved to share risks and costs. In some industry such as pharmaceutical industry, it is a well-known facts that the leading companies must invest a lot of money and funds in research and development (R&D) to discover new drug that can bring in a lot of revenue in the future. However, there is no guarantee that the money invested in R&D which can amount to billions of dollars can result in successful discovery of new marketable drug. For example, Pfizer, a leading drug company share the risks and costs in R&D by forming strategic alliance with the other drug companies such as GlaxoSmithKline to achieve risk-sharing which will benefit both companies.
Although strategic alliance brings benefits to the firms, however, it possess some possible risks. Firstly, the loss of competitive edge is one of the potential risk of engaging in strategic alliance. The form of governance chose for multinational firm alliances greatly influences their success, particularly in technologically intense fields such as pharmaceutical, computers and so on. The example is strategic alliance between IBM and Microsoft. According to the agreement, the latter company took the responsibility of supplying microprocessors to IBM. However, the perceived strategic alliance resulted in IBM’s core competency to be taken by Microsoft, and dramatic decrease in IBM market share.
Next, loss of autonomy for a company is another serious shortcoming that is often associated with strategic alliance. Companies that are forming strategic alliances often have to compromise a specific proportion of their power in terms of decision making. The firms not just share risks and profits, they also share control, thereby limiting what each can do. This can be further explained by
Continue for 3 more pages »
Read full document
Download as (for upgraded members)
Citation Generator
MLA 7
CHICAGO
(2016, 04). Strategic Alliances. EssaysForStudent.com. Retrieved 04, 2016, from
“Strategic Alliances” EssaysForStudent.com. 04 2016. 2016. 04 2016 <
"Strategic Alliances." EssaysForStudent.com. EssaysForStudent.com, 04 2016. Web. 04 2016. <
"Strategic Alliances." EssaysForStudent.com. 04, 2016. Accessed 04, 2016.
Essay Preview
By: YWYee
Submitted: April 2, 2016
Essay Length: 788 Words / 4 Pages
Paper type: Essay Views: 388
Report this essay
Tweet
Related Essays
Term Sheet for Potential Equity Investment In/and Strategic Alliance
TERM SHEET FOR POTENTIAL EQUITY INVESTMENT IN [NAME OF CORPORATION] / AND STRATEGIC ALLIANCE This term sheet summarizes the principal terms with respect to a
2,783 Words  |  12 Pages
Strategic Alliances in the Chinese Automobile Industry
Strategic alliances in the Chinese automobile industry Italo Andres Sanhueza Student ID: 2007950305 5/23/2008 International Business (BUSS313) Professor Mannsoo Shin Contents Structure of the paper
1,201 Words  |  5 Pages
Strategic Alliances
Introduction In this paper, I will try to explain some of the situations that trigger a strategic alliance as well as the impact that it
2,648 Words  |  11 Pages
Connect Ads' Announces Strategic Alliance with 'facebook
Leading digital advertising company becomes social networking portal's official representation partner for the MENA region Dubai, February 24, 2010 - Connect Ads, the region's
676 Words  |  3 Pages
Strategic Alliance: Arima Modelling
MFEFM ASSIGNMENT ARIMA Modelling ________________ Objective The objective is to analyze the closing Prices of stock of ITC over the period 7-29-2015 to 9-28-2015 and
585 Words  |  3 Pages
Similar Topics
Strategic Management Tool Public Management
Strategic Advantages Backward Integration
Get Access to 89,000+ Essays and Term Papers
Join 209,000+ Other Students
High Quality Essays and Documents
Sign up
© 2008–2020 EssaysForStudent.comFree Essays, Book Reports, Term Papers and Research Papers
Essays
Sign up
Sign in
Contact us
Site Map
Privacy Policy
Terms of Service
Facebook
Twitter